Record funds raised from tax relief schemes

NEARLY £1.8bn in funds have been raised by smaller companies under the EIS and SEIS tax relief schemes, a record figure, new stats from HMRC show.

There were 3,265 companies that raised funds through the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Schemes (SEIS) in 2014/15. They are are tax-based venture capital schemes designed to help small, higher-risk, trading companies raise finance.

Rob Donaldson, head of corporate finance RSM, said: ‘In the current era of financial repression, with yields across all asset classes being crushed by the impact of unconventional monetary policy, there is clearly a growing appetite among investors for higher risk, higher reward investments and the tax reliefs on offer via these schemes are proving to be very popular.”

The result has shown a boost for these companies, with the latest figures showing a record number of companies raising funds.

Many UK companies are benefitting from these schemes, with London and the South East received 65% of EIS investment. This shows regional imbalance as in contrast, companies in the North East received less than 1% over the same period.

The business services sector has been the biggest beneficiary of EIS investments, which have trebled in three years from £200m in 2012/13 to £604.7m in 2014/15. Investments in EIS with hi-tech companies have also risen by 77% from £197m in 2012/13 to £349m in 2014/15.